SSD prices to rise 20-25% in the next few months due to NAND shortage. HDDs too

[Arthur]

Better stock up!

 

Source: Tom's Hardware

 

We began reporting on the first signs of the looming NAND shortage all the way back in May, and have touched on the domino effect in many articles over the ensuing months as it unfolded. Now the shortage is in full swing: DRAMeXchange reported that the average price of MLC SSDs rose this quarter between 6%-10%, while TLC SSDs also rose 6%-9%. We also reached out to Trendfocus, whose projections indicate even higher price hikes at both the retail and OEM level.

 

To make matters worse, although HDDs unexpectedly had the biggest quarter-over-quarter recovery in seven years, according to Trendfocus, now the HDD industry is beginning to exhibit the early signs of "tightened" supply--which means there could be shortages and higher prices in that segment as well.

 

An increase in smartphone capacity, SSDs in laptops, and a terrible transition to 3D NAND led to SSDs prices that are unquestionably on the rise, and if HDDs also rise at the same time, it could lead to the perfect storm of higher storage prices. It appears the end of low-priced storage is nigh, and we don't expect things to improve until late next year.

 

The Rise Of SSDs Leads To Rising Prices - HDD Performance Goes Backward

In many ways, SSDs are a victim of their own success. The continued price drops have made them more competitive with HDDs, so now every market segment is clamoring for NAND. Simultaneously, the market is in the midst of under-supply.

 

The demand spike began in the smartphone segment. Many popular new phones, such as the iPhone 7 (and a slew of new products from Chinese phone manufacturers), now have double the storage of previous models. Oddly enough, Samsung's Note 7 recall also complicated matters; it effectively removed at least a hundred million gigabytes of NAND from the market, many of which Samsung replaced--and then removed again. This might've been an annoyance during normal market conditions, but Samsung is already dealing with shortages, so it is particularly painful.

 

SSD demand, in general, is increasing rapidly, but notebook adoption is a particular bright spot. DRAMeXchange indicated that more than 30% of notebooks will ship with an SSD this year and that it will rise to above 50% "sometime within the 2017~2018 period.” Talk about fuzzy math. Others are a bit more exact and say that SSD penetration in notebooks will reach 52% next year, though only 13% of desktop PCs will sell with an SSD.

 

It's easy to see why SSDs are winning in notebooks, and the HDD vendors are making matters worse by shipping 2.5" SMR HDDs for the "performance" laptop market. The short version: SMR is the slowest thing ever to happen to HDDs (and they were slow already). SMR HDDs are cheaper to produce than the speedier normal PMR HDDs, but the OEMs likely won't pass down those savings to the end user, and SMR is absolutely abysmal for running an operating system.

 

The move to SMR will only compound the glaring SSD versus HDD performance issues, as most users would (literally) be better served by booting from a USB stick than an SMR HDD. Also, some HDD vendors aren't even labeling these drives as the slower SMR technology in marketing material or even the manual, so proceed with caution.

 

The Domino Effect

All of these things are great for the NAND vendors, who are raking in record revenues (DRAMeXchange reports a 19.6% increase), but for the consumer, the worst is likely yet to come.

 

As we reported nearly six months ago, many of the third-party SSD vendors were already building massive NAND stockpiles worth hundreds of millions of dollars to weather the coming storm. These stockpiles helped to smooth over the price increases, so we have only seen limited impact in the retail market--until now.

 

The shortage is lasting much longer than anyone predicted, and I think it will continue until the end of next year. The pre-emptive NAND stockpiles are likely either already exhausted, or close, which will magnify the price increases at retail as the new higher prices are handed down to the customer. As shortages progress, the vendors tend to ignore the smaller, less desirable customers at first, and there is word that the USB segment is already experiencing a sharper increase in NAND prices than the rest of the industry. (All of a sudden, USB-class NAND may suddenly be SSD worthy).

 

Of course, as with any shortage, there may be a massive glut after all of this demand is satisfied because there will be a bevy of new fabs that will keep pumping out NAND. It will likely be 2018 before that happens, if it even does.

 

Many analysts are predicting SSD prices to increase 20-25% over the next few months, so if you plan to buy an SSD or HDD, the time is now.